Home Today's Paper Most Popular Video Gallery Photo Gallery
Subscription Blog Signin Register
Logo
Thursday, August 17, 2017 01:24:22 AM
Follow Us On: Facebook Twitter Twitter Twitter Twitter

Banks suffer

Lower interest drives away depositors

By
21st-Mar-2017       Readers ( 263 )   0 Comments
Comments
Share your thought
Post a comment »
Read all (0) »

Anisul Islam Noor :
The country's banking sector has witnessed slow growth of deposit in the current year compared with previous year, sector insiders said.
They said, the depositors these days feel discouraged from putting money in banks for lower interest rates.
The growth of deposits, on a year-on-year basis, rose to 13.13 per cent in the last calendar year from 13.08 per cent a year ago while the credit growth increased to 15.32 per cent from 12.58 per cent, shows a Bangladesh Bank data.
The deposit growth decreased gradual mainly due to lower interest rates, offered by the banks, central bank sources said.     The growth rate of deposits came down to 13.5 per cent in September 2016 from 14.46 per cent at the end of June. It further came down to 13.13 per cent in December the same year.
On the other hand, the credit growth climbed to 15.32 per cent in December from 14.5 per cent in September 2016. The rate was 15.42 in June.
Bankers and experts said, depositors now feel encouraged to invest their money in government savings schemes and stock market for getting higher returns on their investments.
Some depositors also prefer Non-Banking Financial Institutions (NBFIs) to banks in depositing their money because it offers higher interests on term deposits, they added.
The NBFIs are now offering interest rates on term deposits ranging between around 6.0 per cent and 16 per cent while the banks offer a near-negative 0.10 per cent to maximum 9.50 per cent.
The NBFIs are now allowed to collect fixed deposit from individuals and organizations for three months instead of previous term of six months.
The banks, however, offer interest rates on savings deposits ranging between 0.40 per cent and 6.0 per cent, according to the BB's latest monitoring report.
"Such falling trend in interest rates has pushed far down the overall deposit growth than credit growth in the banking sector," a senior official of the Bangladesh Bank explained.
He also said the deposit-growth rate fell slightly in the recent months following adjustment of loans with loans and 'push loans' particularly in small and medium enterprise (SME) sector.
Such comparative trends between deposits and credits had continued until February last, according to the central banker.
All banks' deposits, excluding inter-bank balance, rose to Tk 9088.64 billion as of last December from Tk 8583.31 billion as of June 30, 2016. The aggregate deposit amounted to Tk 8033 billion as of December 2015.
On the other hand, their outstanding loans, excluding inter-bank balance, rose to Tk 6864.80 billion as of December 2016 from Tk 6421.74 billion. The amount was Tk 5953 billion in December 2015.
"Depositors, particularly small ones, are now losing interest in making further deposit with the banks mainly due to lower interest rates on deposits," said Dr. Salehuddin Ahmed, a former BB governor.
Besides, such lower interest rates on deposits cast an adverse impact on people's savings habit, particularly in the banking system, Dr. Ahmed explained.
"Such discouraging savings tendency has also pushed up currency outside banks," the former governor said while explaining the impact on the financial front.
The overall currency outside banks (money kept in traditional caches instead of depositing into bank account) jumped by 22.27 per cent or Tk 206.08 billion to Tk 1131.53 billion in December 2016 from Tk 925.45 billion a year ago, the BB data showed.   
Contacted for his remark on such a situation with savings, SK Sur Chowdhury, Deputy Governor of the BB, said the central bank had already issued a directive to the managing directors and chief executive officers (CEOs) of all the scheduled banks to remain proactive and help check the falling interest rates on deposits.
The latest BB move came against the backdrop of a faster decline in deposit rates than that of the lending rates.
The weighted average interest rates on deposits came down to 5.22 per cent in December 2016 from 5.39 per cent three months ago. It was paid at 5.54 per cent by the banks last June.
The weighted average deposit rate at more than 20 banks slipped below 5.0 per cent in December 2016, according to findings in the BB report.
On the other hand, the weighted average interest rates on lending came down to 9.93 per cent in December 2016 from 10.15 per cent three months before. It was 10.39 per cent in June last. In January 2017, the weighted average interest rates on deposits came down to 5.13 per cent from 5.22 per cent a month before while the weighted average interest rates on lending fell to 9.85 per cent from 9.93 per cent.
"We've taken the latest measures to protect the interests of depositors," Mr. Sur Chowdhury told media while explaining the main objective of the moves.
It will also help discourage expenses in the less-productive sectors, the Deputy Governor noted.
He also said the falling trend in the interest rates on deposits affected the saving habit of the people, prompting them to spend on wasteful consumption and unproductive sectors.
However, the credit-deposit ratio (CDR) -- officially known as advance-deposit ratio (ADR) -- of all banks reached 71.85 as of December last from 71.59 per cent as of June 30. It was 70.98 per cent as of December 31, 2015.
Earlier, the central bank had set the safe limit of CDR at 85 per cent for conventional banks and at 90 per cent for Shariah-based Islamic Banks.

0 Comments. Share your thoughts also.
Write a comment
Tariff
Add Rate

News Archive

Inside The New Nation

Editorial »

Even people from West Bengal are coming for shelter


THE flood situation is aggravating as the water levels in major rivers and their tributaries in the north and northeast are still rising or not showing enough sign of slow down. Government has ignored flood warning only to be caught unguarded by scarcity of arrangement to save affected people. Over ...

International »

Fears for 600 still missing in Sierra Leone floods


AFP, Srinagar :Indian and Chinese troops clashed briefly on a disputed area of land in the Himalayas, officials said Wednesday, exacerbating tensions during a months-long standoff between the two armies.Chinese troops threw stones at Indian soldiers near Pangong Lake, a major tourist attraction in the picturesque mountain region of Ladakh ...

Sports »

Thailand's Rojnaree Taweechai (right) battles for control the ball with Indonesia's Ivy Nernie Priscilla at the women's water polo round robin during South East Asian Games in Kuala Lumpur, Malaysia on Wednesday.


Entertainment »

Shabnam on her birthday


Entertainment Report :Today is the birthday of legendary film actress Shabnam. Last year she lost her husband noted music composer and director Robin Ghosh. After losing husband Shabnam has been passing lonely days. Her only son Roni Ghosh most of the time stays outside the country due to his professional ...

City »

Bangladesh Awami League organised a memorial meeting on the occasion of the National Mourning Day and 42nd martyrdom anniversary of Bangabandhu Sheikh Mujibur Rahman at the Bangabandhu International Conference Centre in the city yesterday.


City »

Participants at the prayers session at Dhakeshwari Jatiya Mandir on Tuesday on the occasion of National Mourning Day.


.

Football »

Thailand`s Chaiyawat Buran (left) celebrates after scoring a goal against Indonesia during the soccer match at the South East Asian Games in Shah Alam, Malaysia on Tuesday.


.

Editorial »

Permission for industries around Sundarbans breaks govt own rules


THE government decision to allow industries and legalize existing ones in the Ecologically Critical Area (ECA) around Sundarbans clearly shows that it is compromising the sensitive issue to pressure from powerful quarter inside and outside the country. The move came at a time when UNESCO has asked the government to ...

Entertainment »

Tania, Sweety, Mou for first time in Eid serial


Sheikh Arif Bulbon :In the beginning of 90s, friendship among Mou, Tania and Sweety started. Till now they have a good friendship. For this reason, during taking part in shooting they took part in open discussion with each other. These three friends for the first time worked together in an ...

International »

Conflicts in Syria, Iraq far from over despite IS setbacks


AFP, Baghdad :Despite the recapture of swathes of territory from the Islamic State group, the conflicts in Iraq and Syria are far from over as their governments face major political challenges, experts warn.In July the jihadists lost control of Iraq's second city Mosul in a major setback three years after ...

Editorial »

Bangabandhu`s greatness must be used for building a more humane country


THE nation mourns the 42nd Shahadat Anniversary of Bangabandhu Sheikh Mujibur Rahman today with prayers and solemnity throughout the country. He was assassinated with almost all of his family members in the fateful night. Some of his closest relatives were also killed. It was a night of massacre and Bangladesh ...

Entertainment »

Girls who smoke and are fond of body art are not characterless: Kriti Sanon


Kriti Sanon, who essays the role of a small-town girl in Bareilly Ki Barfi, talks about societal change. A girl who smokes and has tattoos on her body isn’t acceptable by the society and is a notion that exists in India. In Bareilly Ki Barfi, Kriti’s character as Bitti strives ...

City »

A jeep fell down into the Padma river as the pontoon of 3 No. ferryghat of Paturia was displaced due to strong tide of the river. The snap was taken on Monday.


.

International »

Landslide in north India leaves 46 dead


Al Jazeera News :At least 46 people have been killed after a massive landslide trapped two buses and washed away houses in northern India's Himalayan foothills.Soldiers and volunteers resumed rescue operations in the Mandi district of the Himachal Pradesh state on Monday, a day after heavy monsoon rains triggered the ...

City »

Barrister Fazle Noor Taposh, MP addressing a meeting organised by Bangabandhu Ainjibi Parishad in Shamsul Haque Auditorium of the Supreme Court on Sunday in protest against irrelevant statement on the 16th Amendment cancellation verdict.


 
Items that you save may be read at any time on your computer, iPad, iPhone or Android devices.
 
Are you new to our website? Do you have already an account at our website?
Create An Account Log in here
Email this news to a friend or like someone
Email:
Write a comment to this news